Most people conducting business activities in Washington State are subject to this state’s tax registration and reporting requirements. You are considered a business when you engage in any activity, including hobbies, for gain, benefit, or advantage (regardless of profit or loss).
You must register with the Department of Revenue if any of the following apply:
The business and occupation (B&O) tax is a gross receipts tax assessed on the value of products, gross proceeds of sale, or gross income of a business. There are no deductions for labor, materials, taxes, travel expenses, or other costs of doing business.
The B&O tax rate varies depending on the business activity. There are over 30 B&O tax classifications. Generally, interior decorators, designers, and consultants report under the following tax classifications:
If your business sells or rents goods at retail or performs retail services, you must also collect and remit retail sales tax on the total charge for each sale, unless a specific exemption applies. The taxable amount includes charges for permits and other fees, labor, profit, materials, and charges for any subcontractors, even if they are billed separately.
Use tax applies to untaxed purchases of tangible personal property. Generally, sales tax is paid to the seller at the time of purchase. However, if the purchase is made directly from out-of-state sellers through the Internet, telemarketing, mail order, or other means, sales tax may not have been charged. In such cases, use tax is usually owed. Certain retail services, such as office remodeling or equipment repair (including both materials and labor), are also subject to either retail sales or use tax.
For interior designers/consultants that sell or provide tangible personal property (furnishings, fixtures, artwork, or other goods) to their clients, the correct tax treatment is determined by who is responsible for payment of the goods as noted in the contract or agreement between the seller and buyer.
Some of the methods by which interior designers/consultants may contract to sell tangible personal property to their clients include:
Sales to consumers
Interior designers, decorators and consultants are taxed differently depending on:
Design or consulting services (you are not responsible for the performance of the property improvements)
These services include working with clients to determine their particular needs and décor options and may include:
When you provide both design services and perform actual improvements to the real property, the taxability of the activity is determined by the predominant activity performed for the entire contract.
Income received by insurers that is subject to the premiums tax, is exempt from business and occupation (B&O) tax (RCW 82.04.320). However, the B&O tax exemption does not extend to sales tax or use tax. Insurers are consumers of tangible personal property and retail services, and must pay sales or use tax on the goods and retail services used in Washington. This guide has been prepared to help insurers understand their sales and use tax liability.
Business License Application: Most businesses operating in Washington State are required to register. You register by completing a Business License Application. When you submit your application, you will receive a Unified Business Identifier (UBI) number and a Business License to post at your location.
RCW 48.14.080 clearly states that insurers are subject to sales tax or use tax on tangible personal property, extended warranties, digital goods and codes, and retail services. It says:
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